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December 14, 2012

Wells Fargo Tweaks 2013 Comp Program for Brokers

The wirehouse broker-dealer adjusts one payout level and adds a bonus focused on client acquisitions

Wells Fargo's San Francisco headquarters (Photo: AP)

Wells Fargo Advisors (WFC) confirmed late Thursday that its core payout grid is largely unchanged for 2013. The biggest change is that the first $11,000 in monthly fees and commissions for which reps get the lower 22% payout, rather than the higher 50% payout, has been expanded to $12,000 per month.

Also, WFA says, it is adding a new way for reps to earn compensation above the grid, other than through long-term deferred compensation.

The award to be rolled out next year will be based on client acquisition, and WFA will receive it by reaching a net-asset-flows target or by obtaining the target for new “key households.”

Those FAs who qualify using the latter method can earn up to $100,000 and can elect to receive the total value of this award and their traditional deferred compensation upfront in cash (via a loan and bonus structure.)

“This is the largest potential award we’ve ever had in our compensation plan,” according to a company source.

Comp Picture

Experts say that Wells Fargo’s shifts should prove positive for its business results.

As for the core grid change, “This is a consistent, small tweak, which they make every year or so,” said Andy Tasnady, a compensation consultant, in an interview with AdvisorOne. “It affects when their higher [50%-payout] rate kicks in, which started out several years ago as being only after the first $8,000 or $9,000 per month and is getting extended upwards every year.”

Though this “tweak” may not make a huge difference, it could reduce some advisors’ payouts by $3,000 or more a year, the compensation expert notes.

The bigger picture, he says, is that Wells—and other firms like UBS (UBS), Merrill Lynch (BAC), and Morgan Stanley (MS) —“are focusing their changes on [specific] behavioral goals for their financial advisors,” according to Tasnady.

In Wells’ case, the aim is to bring in new clients above a certain asset size to improve FA productivity and provide additional financial services. “Like others," Tasnady said, "Wells is tweaking and shifting more money toward these behaviors. We see it as efficient way to spend their compensation dollars."

Wells Fargo Advisors, led by Danny Ludeman, said its headcount was 18,277 as of Sept. 30, down 109 from 18,386 in the second quarter of 2012. The number of traditional advisors as of Sept. 30 was 10,857 vs. 10,913 in the previous quarter.

In mid-November, Wells Fargo said it recruited 24 advisors with $2.2 billion in assets in recent months for its traditional Private-Client Group channel. Its independent-advisor channel, FiNet, noted that it added seven advisors with about $1.3 billion in assets in November.